Using a large sample of employee and employer matched data, we estimate the wage premiums and the effect on the wage inequality of union membership. After controlling the individual human capital and firm productivity variables, we find that the average union wage premium of the male is positive, the average union wage premium of the female is negative. Union increases its male members’ wage but fails to improve female members' wage. The estimates of quantile regression show that the union wage premiums are positive at lower end and negative at higher end of the wage distribution. The decomposition of variance shows that the wage inequality would have increased about 11% if there were no union in the economy. The effect of union on the wage structure is promoting the lower and limiting the higher, which is the main approach by which the union decreases the wage inequality in the whole society.